Railways has formed another high-level committee to finalise the bidding documents for setting up multi-crore locomotive units at Marhora and Madhepura in Bihar on PPP model.

“The three-member committee comprising officials from finance, electrical and mechanical departments have been formed to resolve the price variation clause issue in the bid documents,” Railway Ministry sources said.

The committee would submit its recommendations shortly, the sources said.

Aiming at reviving the big-ticket PPP projects in Marhora diesel locomotive plant and Madhepura electric locomotive plant, the railways had earlier constituted two committees in January to rework the bidding documents to make them more equitable and viable for business.

While the technology transfer issue is being finalised, the Ministry is yet to resolve the price variation clause in the bid documents. The multi-crore locomotive projects were put on hold temporarily due to these factors.

“Differences still persist on the issue of price variation clause and the Railway Board will finally decide on the issue after examining the report submitted by the committee,” the sources added.

This clause was earlier loaded in favour of intending bidders which will now being made more equitable and designed to be fair to both sides.

The price variation clause describes the price from year to year for a long-term contract incorporating indices such as labour cost, inflation and materials cost for which official indices are published by the Reserve Bank of India.

The Rs 1,500-crore Madhepura plant and Rs 2,000-crore Marhora plant are considered to be big-ticket projects for railways which is expected to produce about 180 locomotives a year. The contract will be operative for 10 years for manufacturing and 15 years for maintenance.

While four American and European companies are being shortlisted for Madhepura electrical locomotive plant, two American companies are shortlisted for the Marhora diesel locomotive plant.

The railways wants to make the terms and conditions of Madhepura and Marhora projects similar and bring about harmony between the two bid documents so that the projects become aligned on identical lines.

Even though there is progress in the project, the speed of progress is slow which is causing concern to the bidders. The Railway Board, therefore, is taking initiatives to allay the concerns of the bidders.

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